Annual Report

ANNUAL REPORT

FOR THE YEAR ENDED 30 JUNE 2013

CORPORATE INFORMATION

Jupiter Energy Limited

ABN 65 084 918 481

Directors

Geoffrey Gander (Executive Chairman/Chief Executive Officer)

Alastair Beardsall (Non-Executive Director)

Baltabek Kuandykov (Non-Executive Director)

Scott Mison (Executive Director)

Company Secretary

Scott Mison

Registered Office & Principal Place of Business

Level 2, 28 Kings Park Road

West Perth WA 6005

PO Box 1282

Western Australia 6872

Telephone +61 8 9322 8222

Facsimile +61 8 9322 8244

Email info@jupiterenergy.com

Website www.jupiterenergy.com

Solicitors

Steinepreis Paganin

Level 4,

16 Milligan Street

Perth WA 6000

Auditors

Ernst & Young

11 Mounts Bay Road

Perth WA 6000

Bankers

National Australia Bank Ltd

UB13.03, 100 St Georges TerracePerth WA 6000

Nomad

FinnCap Ltd

60 New Broad St

London, EC2M 1JJ

United Kingdom

Share Registry

Computershare Investor Services Pty Ltd

Level 2, 45 St George's Terrace

Perth WA 6000

Telephone 1300 557 010 (only within Australia)

+61 8 9323 2000

Facsimile +61 8 9323 2033

Website www.computershare.com

Stock Exchange Listing

Jupiter Energy Limited shares are listed on the Australian Securities Exchange under the code JPR, on the AIM Market under the code JPRL and on the Kazakh Stock Exchange (KASE) under the code AU_JPRL.

Contents of Financial Report

Chairman's Letter................................................................................................................................................................ 1

Directors' Report ................................................................................................................................................................. 2

Corporate Governance Statement ................................................................................................................................ 23

Auditor Independence Declaration ............................................................................................................................... 29

Consolidated Jupiter Energy Limited Financial Statements

Consolidated Statement of Comprehensive Income............................................................................................. 31

Consolidated Statement of Financial Position........................................................................................................ 32

Consolidated Statement of Cash Flows................................................................................................................... 33

Consolidated Statement of Changes in Equity ....................................................................................................... 34

Notes to the Consolidated Financial Statements ...................................................................................................... 35

Directors' Declaration....................................................................................................................................................... 73

Independent Audit Report to the members of Jupiter Limited.................................................................................. 74

ASX Additional Information.............................................................................................................................................. 76

CHAIRMAN'S LETTER

Dear Shareholder,

I am pleased to present the 2013 Annual Report for Jupiter Energy Limited (Jupiter Energy or the Company).

Over the past twelve months, the Company has continued to focus on the development of the Block 31 licence area with the drilling of three exploration wells in the southern extension of the permit (known locally as West Zhetybai) and with ongoing trial production from three wells in the northern area of the permit. More detail on this activity is contained in the Operations Review section of this report.

The prospectivity of our 100% owned licence area continues to improve and on 11 September 2013 the Company announced the results from three independent reserve reports; the outstanding, post period end highlight was that the independent reserve reports for the Akkar East and West Zhetybai fields, prepared as part of the Kazakh State Reserves process, estimated that the combined C1+C2 reserves of these two fields now stands at approximately 102.5 million barrels of recoverable oil, an almost threefold increase from the 2012 State approved C1+C2 figure of 37 million barrels.

The Competent Persons Report prepared by McDaniel and Associates estimated reserves from the mid Triassic as follows:

· Proved Reserves: 1P 9.7 mmbbls

· Proved plus Probable Reserves: 2P 19.2 mmbbls

· Proved plus Probable plus Possible: 3P 28.7 mmbbls

As part of the work undertaken by McDaniel to establish the commercial threshold of the mid-Triassic reserves, the Net Present Value of the proved+probable reserves using a discounted cashflow model with a discount rate of 10% was calculated as $US304.6m (~$US15.9/bbl) pre-tax and $US222.5m (~$US11.6/bbl) after tax.

Also during September 2013, the Company gained all the necessary approvals to complete its listing on the Kazakh Stock Exchange (KASE), meaning the Company's shares will shortly be able to be traded on KASE. With Jupiter Energy's shares already listed on London's AIM Market (AIM) and the Australian Stock Exchange (ASX), the Company now has access to investment communities in most of the key jurisdictions that have an interest in Central Asia.

Our two major shareholders, the Waterford Group and Soyuzneftegas Capital Limited, continue to show great support for the Company, participating in both the August 2012 Rights Issue and May 2013 issue of $US9m of Series A Convertible Notes. Waterford Group also participated in the September 2013 Series B Convertible Notes. Their holdings remain at 29.5% and 19.8% respectively and the total number of shares on issue as of the date of this report totals 153,377,693.

I believe that the Company has a pivotal 12 months ahead of it with a need to focus on both exploration and appraisal drilling as well as to start the building of the requisite infrastructure to allow the Akkar East oilfield to move into Full Field Development phase - a key step in the Company achieving its first sale of export oil.

The Board remains confident of the prospectivity of the licence area and that the two oilfields that have already been discovered on Block 31 can be both developed into significant producers.

Finally, I would like to take this opportunity to thank all our employees and shareholders for their continued support over the past twelve months.

Sincerely

Geoff Gander

Chairman/CEO

DIRECTORS' REPORT

Your Directors submit their report for the year ended 30 June 2013.

DIRECTORS

The names and details of the Company's Directors in office during the financial year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.

Names, qualifications experience and special responsibilities

Interests in the shares and options of the company and related bodies corporate

At the date of this report, the interest of the Directors in the shares and options of Jupiter Energy Limited were:

In compliance with Corporations Law, none of the Directors' shareholdings in the Company is subject to hedging. Each Director must disclose any changes via formal ASX, AIM and KASE announcement within 5 working days of that change. Any changes in Directors' shareholdings are also confirmed at each Board meeting.

DIRECTORS' REPORT (continued)

CORPORATE STRUCTURE

Jupiter Energy Limited is a company limited by shares that is incorporated and domiciled in Australia. Jupiter Energy Limited has prepared a consolidated financial report incorporating the entities that it controlled during the financial year, which are outlined in note 28 of the financial statements.

The principal activities of the consolidated entity during the course of the financial year included:

· Exploration for oil and gas in Kazakhstan: and

· Appraisal, development and production of oil and gas properties in Kazakhstan.

The consolidated entity employed 50 employees as at 30 June 2013 (2012: 39 employees).

DIVIDENDS

No dividends in respect of the current or previous financial year have been paid, declared or recommended for payment.

FINANCIAL REVIEW

Operating Results

The consolidated loss for the year after income tax was $4,885,829 (2012: $4,295,102).

Review of Financial Condition

At the end of the 2013 financial year, cash resources were $4,131,731 (2012: $395,445). Assets increased to $72,091,204 (2012: $44,297,607) and equity increased to $54,573,145 (2012: $38,468,617).

CAPITAL RAISING / CAPITAL STRUCTURE

During the year the following capital raisings occurred:

- A 1 for 4 non renounceable Rights Issue was announced in June 2012. This offer was priced at $0.40 per share and raised approximately $11,613,016 (before costs). The issue was fully underwritten by Waterford Petroleum Limited and Soyuzneftegas Capital Limited.

- In August Soyuzneftegas Capital Limited converted its $US3.45m Convertible Notes in exchange for 8,215,000 shares.

- In December 2012, the Group raised US$3m via promissory notes repayable on 31 December 2013 (December 2013 Promissory Notes). These notes were converted to Convertible Notes on 30 May 2013.

- In March 2013, the Group raised US$3m via promissory notes repayable on 31 March 2014 (March 2014 Promissory Notes).

- In May 2013, the Group raised US$9m through the issue of Convertible Notes with a coupon of 12% and an exercise price of $1.25 and expiring 31 May 2016. The net cash raised was US$6m before costs, as the December 2013 Promissory Notes were converted to Convertible Notes.

Post year end the following capital raising occurred:

In September 2013, the Group raised US$6.5m through the issue of Series B Convertible Notes with a coupon of 12% and an exercise price of $1.25 and expiring 31 September 2016. The net cash raised was US$3.5m before costs, as the March 2014 Promissory Notes were converted to Convertible Notes.

DIRECTORS' REPORT (continued)

Summary of share and share options on issue

At the date of this report, the unissued ordinary shares of Jupiter Energy Limited under Performance Rights are as follows:

Summary of Conditions relating to the vesting of the Performance Rights:

The Performance Rights for each holder shall vest in proportion to the % increase in the Share price of the Company above $0.735 subject to a minimum increase of 25%, i.e. Performance Rights will start vesting at $0.919. For 100% of the Performance Rights to vest, the share price of the Company needs to reach $1.47 (Vesting Conditions). In respect of the Vesting Conditions, the % increase in the Share price of the Company will be calculated by reference to the volume weighted average price of Shares in the 20 consecutive trading days immediately prior to the Vesting Date.

OPERATING REVIEW

This section provides details on the operations of the past 12 months. The key operational events for the year were the drilling, completion and production testing of Jupiter Energy's fifth, sixth and seventh operated wells (J-55, J-58 and J-59) on the southern extension area of Block 31 and the ongoing trial production from the J-50, J-51 and J-52 wells. Details on all these wells are outlined below as are details on other work carried out over the course of the year.

Well Operations

 J-50, J-51 and J-52 Trial Production

The J-50, J-51 and J-52 wells all have their trial production licences in place and during year the Company received cash of $US7.549m from the sale of approximately 194,300 barrels of oil at an average price of $US38.85 per barrel.

All oil sales were made into the domestic market, as is required under Trial Production, and made through predominantly two local traders. All sales were made on a pre-paid basis, with oil collected by the traders from the well head.

The Company announced during April 2013 that the J-50 well had been shut in and an application made for a new gas emissions permit. The improved production from J-50 after the installation of an Electric Submersible Pump in October 2012 meant that the gas emission limit originally approved for 2013 was exceeded earlier than expected.

The J-50 well is currently forecasted to return to production in January 2014. In the meantime the J-51 and J-52 wells continue to produce at a cumulative rate of approximately 650 barrels of oil per day (bopd).

J-53

The J-53 well is located 2.8 km southeast of the J-52 well. The well has been shut in awaiting remedial work to address a water influx that has reduced the overall commercial performance.

The work will be carried out a soon as is feasible and it is hoped to bring the well onto Trial Production during 2014.

DIRECTORS' REPORT (continued)

The Trial Production Licences for the J-50, J-51, J-52 and J-53 wells have a term of three years and the next step post Trial Production will be the implementation of the necessary surface infrastructure required to develop the discoveries for long term production.

J-55 (Southern Extension)

The J-55 well was the Company's fifth exploration well and the second of its two 2012 commitment wells on Block 31. The well is located 5.7 km southeast of the J-53 well and is the first well that the Company has drilled on the southern area extension. This area was granted to the Company in 2011 and is located to the south of the already discovered Akkar East oil accumulation.

The J-55 well took a total of 55 days to drill and reached a total depth of 3,400m on 29 September 2012. Hydrocarbon shows while drilling, including a core in the reservoir zone, and subsequent open hole wireline logs all indicated hydrocarbons in the Triassic reservoir. The open hole logs indicated good levels of oil saturation and porosity.

Analysis by independent consulting firm Reservoir Evaluation Services LLC ("RES") confirmed some 112m of gross reservoir and approximately 60m of net pay at the Middle Triassic carbonate reservoir unit, the primary reservoir objective in the well. The reservoir is located on a separate structure to the Akkar East field. Cut offs of 3.8% porosity and 50% oil saturation were used in the analysis, with a correction for mud filtrate displacement.

Initial testing of the J-55 well produced oil with a high water cut post perforation and stimulation of both the T2B and T2A horizons; the origins of the water still needs to be determined with further remedial work.

An application for a Trial Production licence will be submitted for the J-55 well as soon as the State Reserves Report for the Southern Extension area has been approved by the relevant authorities. This is expected to occur during the 1st quarter of 2014. An application for further testing work on the well may also be submitted prior to the Trial Production Licence being received.

J-58 (Southern Extension)

The J-58 well was the Company's sixth exploration well and is located 3.8km southeast of the J-55 discovery well and is the second well that the Company drilled on the southern area extension. The well took a total of 37 days to drill and reached a total depth of 3,320m on 28 November 2012; the performance of the drilling operation was better than anticipated with the well reaching final depth ahead of schedule.

Hydrocarbon shows while drilling, including a core in the reservoir zone, and subsequent open hole wireline logs all indicated hydrocarbons in the Triassic reservoir. The open hole logs indicated good levels of oil saturation and porosity.

Analysis by independent consulting firm RES confirmed some 152.8m of gross reservoir and approximately 75.6m of net pay at the Middle Triassic T2B carbonate reservoir unit, the primary reservoir objective in the well. In addition RES analysis also confirmed an additional 120.1m of gross reservoir and approximately 52m of net pay at the Middle Triassic T2A carbonate reservoir unit. Cut offs of 3.8% porosity and 50% oil saturation were used in the analysis, with a correction for mud filtrate displacement.

Initial production testing of the J-58 well from a 5.5m unstimulated zone in the lower T2B Triassic over a 7 day period with a 9mm choke size, resulted in a flow rate of approximately 1,300 bopd. Testing of the T2A horizon was then carried out and results indicated that no additional inflow from this horizon was achieved. The well was brought back onto production from the T2B horizon for a short period and then shut in on the day that the approved Production Testing period expired.

An application for a Trial Production Licence will be submitted for the J-58 well as soon as the State Reserves Report for the Southern Extension area has been approved by the relevant authorities. This is expected to occur during the 1st quarter of 2014. An application for further testing work on the well may also be submitted prior to the Trial Production Licence being received.

DIRECTORS' REPORT (continued)

J-59 (Southern Extension)

The J-59 well was the Company's seventh exploration well and is located 3.8km southeast of the J-58 discovery well and is the third well that the Company has drilled on the southern area extension, alongside the J-55 and J-58 wells.

The well took a total of 52 days to drill and reached a total depth of 3,191m on 20 February 2013; the performance of the drilling operation was in line with expectations. Hydrocarbon shows while drilling, including a core in the reservoir zone, and subsequent open hole wireline logs all indicated hydrocarbons in the Triassic reservoir. The open hole logs indicated good levels of oil saturation and porosity.

Analysis by independent consulting firm RES confirmed some 102.8m of gross reservoir and approximately 42.8m of net pay at the Middle Triassic T2B carbonate reservoir unit, the primary reservoir objective in the well. In addition RES analysis also confirmed an additional 64.6m of gross reservoir and approximately 40.4m of net pay at the Middle Triassic T2A carbonate reservoir unit. Cut offs of 3.8% porosity and 50% oil saturation were used in the analysis, with a correction for mud filtrate displacement.

The permit for testing of the T2B horizon of the J-59 well was issued prior to the completion of the extended testing program on the J-58 well, this overlap of 90 day testing permits resulted in less of the approved 90 day testing period for J-59 being used effectively. The completion and testing of J-59 was commenced in June 2013 and in the limited time available the key focus was to establish the parameters required to provide the required information to enable the completion of the State Reserves Report for the Southern Extension area.

During testing oil was recovered to surface and bottom hole samples taken before the 90 day production period expired.

An application for a Trial Production Licence will be submitted for the J-59 well as soon as the State Reserves Report for the Southern Extension area has been approved by the relevant authorities. This is expected to occur during the 1st half of 2014. An application for further testing work on the well may also be submitted prior to the Trial Production Licence being received.

Independent Reserve Reports

The Company is required to complete a Final Reserves Report for the Akkar East oilfield as part of the process of applying for a Full Field Development licence. This report must be prepared by an approved, independent, Kazakh institute and submitted to the relevant authorities for approval.

In addition, as part of the Trial Production application process for the J-55, J-58 and J-59 wells, a Preliminary Reserves Report needs to be completed for the Southern Extension area. This report must also be prepared by an approved, independent, Kazakh institute and submitted to the relevant authorities for approval.

Both these reports are prepared using the Kazakh classification system of reserves which has been developed from the Russian reserves system which is based on the analysis of geological attributes.

In December 2012, the Company also appointed an independent reserves engineering company to undertake an audit of the producing Mid Triassic T2B horizon using the Petroleum Resource Management System ("PRMS") classification system. Under this classification system, reserves are defined as those quantities of oil which are estimated to be commercially recovered from a known accumulation from a given date forward.

The results of these three reports were released to shareholders on 11 September 2013 and are detailed in the "Significant Events after the Balance Sheet Date" section below.

DIRECTORS' REPORT (continued)

Forward Plan for Drilling Activity

The Company is currently reviewing the funding plan for the coming twelve months. Assuming the funding is in place, it is expected that there will be a combination of exploration, appraisal and early development wells drilled.

The next exploration well (J-54) is a large structural closure mapped using 3D seismic to the north of the producing East Akkar field. The prospect is believed to be a separate accumulation and the prognosis is that it is structurally up dip of Akkar East. The Company estimates a potential resource of over 20 million barrels of oil associated with this prospect.

The Company considers that the main risk associated with the proposed J-54 well is an adequate top seal to trap oil. Assuming success, it is believed that the reservoir quality and flow rates should be similar to that found in the Akkar East field. The current plan is to drill the J-54 well during the 1st quarter of 2014.

Details on the Exploration and Production Licences

The Company expects to submit an application for a further two year extension to the Block 31 Exploration Licence in 2014. The Exploration Licence had an initial 6 year term (ending December 2012) and already has had its 1st two year extension approved to December 2014. This further extension, should it be approved, will take the exploration period through to December 2016.

The Block 31 contract also has the right to a 25 year Production Licence and it is the Company's intention to continue exploring on the southern section of Block 31 whilst also applying, during 2015, for a Production Licence for the already discovered Akkar East field in the northern section of Block 31.

Prospectivity

As outlined in the Forward Plan for Drilling Activity section of this report, the drilling of J-54 during the 1st quarter of calendar 2014 has the potential, assuming success, for an a further upgrade of Block 31 reserves. The Company believes the prospectivity of Jupiter Energy's Block 31 continues to improve and the Board are confident that further additions to the reserves are achievable.

Production

As outlined above, the J-50, J-51, J-52 and J-53 wells already have their respective Trial Production Licences approved and it is expected that wells J-55, J-58 and J-59 will have their application for Trial Production licences approved during 2014.

Total barrels sold under Trial Production during the 2012/13 financial year totalled 194,300 for revenues of A$5,778,057 This represents a 443% increase in revenues achieved in the 2011/12 financial year ($1,063,086).

Board and Staffing

An integrated operating team that has proven in-country experience as well as the capacity to operate major assets is a critical component to success in Kazakhstan. The continued building of such a team has been a major priority over the course of several years and the past 12 months has been no exception.

The Board is confident that the Company is well prepared for continued growth over the coming years.

DIRECTORS' REPORT (continued)

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

Independent Reserve Reports

On 11 September 2013 the Company announced the details of three independent reserve estimations that had been carried out on the various accumulations on the Block 31 permit.

Two of these reports were State Reserve Reports prepared by independent consulting firm RES. The first of these reports was the Akkar East Reserves Report and this report was prepared as part of the process of moving the Akkar East field into Full Field Development. This review of the Akkar East field was a follow on to the 2012 Preliminary Reserves report prepared by RES submitted as part of the process required to enable the J-50, J-51, J-52 and J-53 wells to be granted their respective Trial Production Licences (TPL's). The Preliminary Reserves report was approved by the Kazakh authorities in June 2012.

The second report was the Southern Extension area (known locally as West Zhetybai) Preliminary Reserves Report and this report is the first step towards the granting of TPL's for the J-55, J-58 and J-59 wells.

In summary, the Akkar East accumulation covers the area delineated by the J-51, J-52 and J-53 wells and the Oil-In-Place (OIP) for this area has been estimated at ~129 mmbbls with recoverable reserves estimated at ~32.6 mmbbls. The C1 reserves have been estimated at ~10.7 mmbbls and C2 reserves at ~21.9 mmbbls. The recoverable reserves are based on a recovery factor of 27.2%.

The J-50 well is part of the Akkar North accumulation and the estimated recoverable reserves for this area are ~8.6 mmbbls (C1 - ~4 mmbbls and C2 - ~4.6 mmbbls) bringing the total recoverable reserves in the area delineated by the wells J-50, 51, 52 and 53 to ~41.2 mmbbls; C1 reserves of ~14.7 mmbbls and C2 reserves of ~26.5 mmbbls.

Estimated reserves from the T31, T32 (both formerly known as the Z Sand), T2A and T2B horizons were used in these calculations. The Akkar East Reserves Report has now been submitted to the relevant authorities; the approval process is expected to take three months.

The West Zhetybai accumulation covers the area delineated by the J-55, J-58 and J-59 wells and reserves have been evaluated for the T31, T32, T2A and T2B horizons. The OIP for this area has been estimated at ~232 mmbbls (from all four horizons) with recoverable reserves estimated at ~61.2 mmbbls. The C1 reserves have been estimated at ~2.3 mmbbls and C2 reserves at ~58.9 mmbbls; the recoverable reserves are based on a recovery factor of 27.2%.

The higher proportion of C2 to C1 reserves indicates the need for (i) further testing of the J-55 and J-59 wells and (ii) general appraisal of the area which may include the drilling of additional wells.

RES has submitted the West Zhetybai Preliminary Reserves Report to the relevant authorities; approval is expected to take three months.

The third report was a Competent Persons Report (CPR) that was prepared using the Society of Petroleum Engineers Petroleum Resources Management System (PRMS) classification system; reserves are defined as those quantities of oil which are estimated to be commercially recoverable from a known accumulation from a given date forward.

McDaniel & Associates (McDaniel) were engaged to complete this independent reserves audit of only the mid Triassic horizon as identified by wells J-50, J-51, J-52, J-53, J-55, J-58 and J-59.

One of the underlying differences between the Kazakh State Reserves classification system and PRMS classification system is that PRMS also considers the commercial uncertainties rather than only geological attributes and therefore the lack of established commercial oil flow from the J-53, J-55 and J-59 wells resulted in the reserve calculations based primarily on production from the T2B horizon from wells J-50, J-51, J-52 and J-58.

DIRECTORS' REPORT (continued)

The results, by reserve category, were:

· Proved Reserves: 1P 9.7 mmbbls

· Proved plus Probable Reserves: 2P 19.2 mmbbls

· Proved plus Probable plus Possible: 3P 28.7 mmbbls

As part of the work undertaken by McDaniel to establish the commercial threshold of the mid-Triassic reserves, the Net Present Value of the proved+probable reserves using a discounted cashflow model with a discount rate of 10% was calculated as $US304.6m (~$US15.9/bbl) pre-tax and $US222.5m (~$US11.6/bbl) after tax.

Shareholders are encouraged to read the 11 September 2013 announcement in full as it contains more details on the differing reserve classification methodologies used by RES in preparing the State Reserve Reports and by McDaniel in preparing the CPR.

In summary, the results of both independent reserve audits confirmed the prospectivity of the Block 31 permit.

Capital Raising

On 23 September 2013, the Company announced details regarding the issue of $US6.5million of Series B Convertible Notes, issued on 20 September 2013. The key terms of these Convertible Notes were as follows:

· Term: 3 years

· Conversion Price: $US1.25 per share (maximum of 5.2 million shares may be issued)

· Coupon Rate: 12% per annum, with the interest accruing from and including the Issue Date until the earlier of the Conversion Date, Redemption Date or Maturity Date of the Note.

· The Convertible Notes may be redeemed by Jupiter at any time with a minimum of 12 months interest payable if the Convertible Notes are redeemed within the 1st 12 months of their Term

· The issue of the Convertible Notes is carried out under Jupiter's 15% capacity in accordance with ASX Listing Rule 7.1

The breakdown of subscriptions for the Convertible Notes is as follows:

· Waterford Petroleum Limited: $US1.5m

· Mid Ocean Limited $US0.5m

· Mobile Energy Limited: $US4m

· Other Private Investors: $US0.5m

The net cash proceeds of the fundraising was $US3.305m, following the repayment of $US3m of Promissory Notes held by Mobile Energy Limited and the payment of a fee of 3% of the proceeds of the raising ($US195,000) by the Company to Waterford Petroleum Limited for its role in arranging the funding.

The net cash proceeds of the fundraising will be used for the following purposes:

· Remedial work on J-53: ~$US150,000;

· Further testing of the J-59 well: ~$US350,000 and

· General working capital: ~$US2.805m.

The holders of Series A Convertible Notes issued on 31 May 2013 have also agreed to convert their notes to Series B Convertible Notes, effective from 20 September 2013.

This means that all interest payable on the entire $US15.5m Convertible Notes now outstanding will be deferred and accrue from and including the Issue Date of the Series B Convertible Notes until the earlier of the Conversion Date, Redemption Date or Maturity Date of the Note.

DIRECTORS' REPORT (continued)

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Except as otherwise set out in this report, the Directors are unaware of any significant changes in the state of affairs or principal activities of the consolidated entity that occurred during the period under review.

The Directors will continue to pursue oil and gas exploration and production opportunities in the Republic of Kazakhstan.

As Jupiter Energy Limited is listed on the Australian Stock Exchange and London's AIM Market (AIM), it is subject to the continuous disclosure requirements of the ASX Listing Rules and the AIM Rules for Companies which require immediate disclosure to the market of information that is likely to have a material effect on the price or value of Jupiter Energy Limited's securities. The requirement for continuous disclosure is also required for the KASE.

The consolidated entity is committed to achieving the highest standards of environmental performance. Standards set by the Government of Kazakhstan are comprehensive and highly regulated. The consolidated entity strives to comply not only with all Kazakh government regulations, but also maintain worldwide industry standards.

To maintain these high standards the Company is committed to a locally developed environmental monitoring programme. This monitoring programme will continue to expand as and when new regulations are implemented and adopted in Kazakhstan.

HEALTH & SAFETY

The Company has developed a comprehensive Health and Safety policy for its operations in Kazakhstan and has the appropriate personnel in place to monitor the performance of the Company with compliance under this policy. The Company outsources many of its key drilling functions and as part of any contract entered into with third parties, a commitment to Health & Safety and a demonstrated track record of success in this area is a key performance indicator in terms of deciding on which companies will be contracted.

DIRECTORS' REPORT (continued)

MEETINGS OF DIRECTORS

The number of meetings of the Directors held during the year and the number of meetings attended by each Director was as follows:

Due to the small number and geographical spread of the Directors, it was determined that the Board would undertake all of the duties of properly constituted Audit & Compliance and Remuneration Committees.

Competent Persons Statements

General

Keith Martens, BSc Geology and Geophysics, with over 35 years' oil & gas industry experience, is the qualified person who has reviewed and approved the technical information contained in this report. Keith Martens has no material interest in the Company.

Independent Reserves (PRMS)

The information in this report which relates to the proven, probable and possible reserve estimations of the Mid Triassic is based on information compiled by McDaniel & Associates ("McDaniel"), a Canadian based oil & gas consulting company that specialises in oil & gas reserve estimations. McDaniel has used the Petroleum Resources Management System (PRMS) classification system in determining their reserve estimations. McDaniel has sufficient experience which is relevant to oil & gas reserve estimation and to the specific permit in Kazakhstan to qualify as competent to verify the information pertaining to the Mid Triassic reserves. McDaniel has given and not withdrawn its written consent to the inclusion of the Mid Triassic reserve estimations in the form and context in which they appear in this report. McDaniel has no financial interest in the Company.

The information in this report which relates to the C1 and C2 Block 31 reserve estimations is based on information compiled by Reservoir Evaluation Services LLP ("RES"), a Kazakh based oil & gas consulting company that specialises in oil & gas reserve estimations. RES has used the Kazakh Reserve classification system in determining their estimations. RES has sufficient experience which is relevant to oil & gas reserve estimation and to the specific permit in Kazakhstan to qualify as competent to verify the information pertaining to the C1 and C2 reserve estimations. RES has given and not withdrawn its written consent to the inclusion of the C1 and C2 reserve estimations in the form and context in which they appear in this report. RES has no financial interest in the Company.

This remuneration report outlines the Director and executive remuneration arrangements of the Company and the Group in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report, key management personnel (KMP) of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any Director (whether executive or otherwise) of the parent company, and includes the three executives in the Company and the Group.

For the purposes of this report, the term 'executive' encompasses the chief executive, senior executives, general managers and secretaries of the Company and the Group.

Details of key management personnel (including the three highest executives of the Company and the Group)

(i) Directors

(ii) Executives

There were no other changes after reporting date and before the date the financial report was authorised for issue.

Remuneration Philosophy

The remuneration policy of the Group has been designed to align Directors and executives interests with the shareholder and business objectives by providing a fixed remuneration component and offering long term incentives based on a key performance area - the material improvement in share price performance. The Board of the Group believes the remuneration policy to be appropriate to attract and retain the best executives and Directors to run and manage the Company, as well as create goal congruence between Directors, executives and shareholders.

The Board's policy for determining the nature and amount of remuneration for Board members and senior executives of the Company is as follows:

* The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed by the Board after a review of similar listed and unlisted companies with activities in overseas jurisdictions and taking into account the experience and skill set required to successfully develop operations in these jurisdictions from early stage development. The Company does not have a remuneration committee. The Board is of the opinion that due to the nature and size of the Company, the functions performed by a Remuneration Committee can be adequately handled by the full Board.

* All executives receive a base salary (which is based on factors such as length of service and experience), superannuation, fringe benefits and performance incentives.

* The Board reviews executive packages annually by reference to the Company's performance, executive performance and comparable information from industry sectors and other listed companies in similar industries.

Executives are eligible to participate in the Company's long term performance rights plan.

The executive Directors and executives receive a superannuation guarantee contribution as required by the government which is currently 9.25%, and do not receive any other retirement benefits.

The remuneration paid to Directors and executives is valued at the cost to the Company and expensed. Shares given to Directors and executives are valued as the difference between the market price of those shares and the amount paid by the Director or executive. Options are valued using the Black & Scholes methodology. Performance Rights are valued using a hybrid employee share option model. The hybrid model incorporates a trinomial option valuation and a Monte Carlo simulation.

Remuneration Structure

Non-Executive Director Remuneration

Objective

The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and retain directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders.

Structure

The Board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and responsibilities. The Board determines payments to the non-executive Directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to non-executive Directors is subject to approval by shareholders at the Annual General Meeting. Total remuneration for all non-executive Directors, is not to exceed $350,000 per annum as approved by shareholders at the Annual General Meeting held on 15 November 2010. Fees for non-executive Directors are not linked to performance of the Company. However, to align Directors' interests with shareholder interests, the non-executive Directors have been issued Performance Rights which have vesting conditions that are specifically linked to share price performance. Non-executive Directors are also encouraged to hold shares in the company.

The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst Directors is reviewed annually. The Board considers the fees paid to non-executive directors of comparable companies and the potential value provided via the allocation of Performance Rights when undertaking the annual review process.

Each Director receives a fee for being a Director of the Company. Directors who are called upon to perform extra services beyond the director's ordinary duties may be paid additional fees for those services.

Executive Remuneration

Objective

The Group aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within the Group so as to:

- reward executives for Company, business unit and individual performance;

- align the interests of executives with those of shareholders;

- link reward with the strategic goals and performance of the Company; and

- ensure total remuneration is competitive by market standards.

Structure

In determining the level and make-up of executive remuneration, the Board reviews remuneration packages provided by similar listed and unlisted companies with activities in overseas jurisdictions and taking into account the experience and skill set required to successfully develop operations in these jurisdictions from early stage development as well as the salary levels of local workers in that jurisdiction. It is the Board's policy that employment contracts are entered into with the Chief Executive Officer and all key management personnel.

Fixed Remuneration

The fixed remuneration of executives is comprised of a base salary and superannuation. The fixed remuneration of executives is reviewed annually.

Variable remuneration - Short Term Incentives (STI)

The Group operates a STI program for its Kazakh based employees, which is based on a cash bonus subject to the attainment of clearly defined Branch and individual measures.

Actual STI payments awarded to each employee depends on the extent to which specific targets are met. The targets consist of a number of key performance indicators (KPIs) covering financial and non-financial Branch and individual measures of performance.

Directors are not eligible for participation in the STI program.

Variable Remuneration - Long Term Incentives (LTI)

Objective

The objectives of long term incentives are to:

- align executives remuneration with the creation of shareholder wealth;

- recognise the ability and efforts of the Directors, employees and consultants of the Company who have contributed to the success of the Company and to provide them with rewards where deemed appropriate;

- provide an incentive to the Directors, employees and consultants to achieve the long term objectives of the Company and improve the performance of the Company; and

- attract persons of experience and ability to employment with the Company and foster and promote loyalty between the Company and its Directors, employees and consultants.

Structure

Long term incentives granted to Directors and senior executives are delivered in the form of Performance Rights, issued under the Performance Rights Plan.

Company Performance

Due to the current embryonic stage of the Company's growth it is not appropriate at this time to evaluate the Company's financial performance using generally accepted measures such as EBITDA and profitability; this assessment will be developed over the next few years.

The following information provides a summary of the Company's financial performance for the last five years:

\* The earnings per share and last share price have been adjusted for all periods to reflect the 15:1 share consolidation approved on 12 August 2011.

Relationship of Reward and Performance

The value of Performance Rights will represent a significant portion of an executive's salary package. The ultimate value to the executives of the Performance Rights depends on the share price of Jupiter Energy Ltd. The share price is the key performance criteria for the long term incentive as the realised value arising from Performance Rights issued is dependent upon an increase in the share price to above the minimum vesting price for the Performance Rights.

Below is a summary of performance conditions for Performance Rights:

The number of Performance Rights vest in proportion to the percentage increase in share price above $0.735 at vesting date. If the share price is less than $0.919 (minimum vesting price) no Performance Rights vest. For 100% of the Performance Rights to vest, the share price of the Company needs to reach $1.47.

In respect of the Vesting Condition, the % increase in the Share price of the Company will be calculated by reference to the volume weighted average price of Shares in the 20 consecutive trading days immediately prior to the Expiry Date (31 December 2013). No Performance Rights vest if the calculated share price is less than the minimum vesting price at vesting date. The minimum vesting price was set based on 25% premium to the Company's share price at the original grant date.

Details of remuneration (Audited)

Remuneration of Directors and Executives

Table 1: Remuneration for the year ended 30 June 2013

(a): Other relates to living expenses covering cost of apartment/office in London as per service agreement.

(b): Fees relate to CFO, Company Secretary and Director Fees.

Table 2: Remuneration for the year ended 30 June 2012

(a): Relates to a one off cash bonus for work completed outside his duties as a non-executive director.

(b): Other relates to living expenses covering cost of apartment/office in London as per service agreement.

(c): Fees relate to CFO, Company Secretary and Director Fees 

Details of remuneration (Audited)

Remuneration of Directors and Executives (continued)

Compensation Options: Granted and vested during the year ended 30 June 2013

During the 2013 and 2012 year, there were no options granted. 866,669 unlisted options lapsed on 31 December 2012. No options, listed or unlisted, were exercised during the year.

Share issued on Exercise of Compensation Options

There were no shares issued on the exercise of compensation options during the financial years ended 30 June 2013 or 30 June 2012.

Performance Rights

On 9 November 2012, 5,066,666 Performance Rights were approved by shareholders to Directors and executives. The number of Performance Rightsvest in proportion to the percentage increase in share price at vesting date $0.919 (minimum vesting price). For 100% of the Performance Rights to vest, the share price of the Company needs to reach $1.47. In respect of the Vesting Condition, the percentage increase in the Share price of the Company will be calculated by reference to the volume weighted average price of Shares in the 20 consecutive trading days immediately prior to the Vesting Date (31st December 2013). No Performance Rights vest if the calculated share price is less than the minimum vesting price at vesting date.

During the current year, no Performance Rightsvested.

Details of remuneration (Audited)

Remuneration of Directors and Executives (continued)

Table 3: Compensation Performance Rights: Granted and vested during the year ended 30 June 2013

Table 4: Compensation Performance Rights: Granted and vested during the year ended 30 June 2012

\* The only modification was the expiry vesting date was extended from 21 August 2012 to 31 December 2013. All other terms and conditions remained the same.

(i) Represents the incremental fair value, between the original and modified awards at modification date.

Details of remuneration (Audited)

Remuneration of Directors and Executives (continued)

Service agreements

Remuneration and other terms of employment for the Executive Chairman/CEO, Company Sec/CFO, and all other key management positions held in Kazakhstan have been formalised in service agreements. The main provisions of the agreements in relation to Directors holding management roles are set out below.

Geoff Gander, Executive Chairman (Effective - 1 July 2012)

Base Terms

· This agreement was effective from 1 July 2012 and was for a term of 1.5 years (to December 31 2013).

· Base Salary of GBP200,000 including Director Fees and the current Superannuation Levy of 9%.

· Living expenses of GBP 75,000 per year, covering the cost of an apartment/office in London.

· Mr Gander has been issued, after shareholder approval in August 2011, 666,667 Performance Rights. 

· At a General Meeting on 14 May 2012, shareholders approved an extension of the expiry date of the Performance Rights from 21 August 2012 to 31 December 2013.

· An additional allocation of 1.5m Performance Rights was approved by shareholders at the 2012 AGM.

The termination provisions are as follows:

Scott Mison, CFO / Company Secretary / Executive Director (Effective - 1 July 2012)

Base Terms

· This agreement was effective from 1 July 2012 and was for a term of 1. 5 years (to 31 December 2013).

· Base Salary of A$90,000.

· Director fees of A$40,000.

· Mr Mison has been issued, after shareholder approval in August 2011, 133,334 Performance Rights. 

· At a General Meeting on 14 May 2012, shareholders approved an extension of the expiry date of the Performance Rights from 21 August 2012 to 31 December 2013.

· An additional allocation of 366,666 Performance Rights was approved by shareholders at the 2012 AGM.

Details of remuneration (Audited)

Remuneration of Directors and Executives (continued)

The termination provisions are as follows:

Keith Martens, Technical Consultant (Effective - 1 July 2011)

Base Terms

· This agreement is effective from 1 July 2011. The term is on a rolling month basis.

· Fee is $2,000 (excluding GST) per full working day.

The termination provisions are as follows:

End of Remuneration Report (Audited)

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

The Company has entered into Deeds of Indemnity with the Directors, indemnifying them against certain liabilities and costs to the extent permitted by law.

The Company has also agreed to pay a premium in respect of a contract insuring the Directors and Officers of the Company against certain liabilities and costs to the extent permitted by law. Full details of the cover and premium are not disclosed as the insurance policy prohibits the disclosure.

In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Jupiter Energy Limited adhere to strict principles of corporate governance. The Company's corporate governance statement is included on page 23 of this annual report.

The Directors received the declaration included on page 29 of this annual report from the auditor of Jupiter Energy Limited.

NON-AUDIT SERVICES

There were no non-audit services provided by the entity's auditors, Ernst & Young during the year.

This report has been made in accordance with a resolution of the Directors.

G A Gander

Director

Perth, Western Australia

27 September 2013

CORPORATE GOVERNANCE STATEMENT

In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Jupiter adhere to strict principles of corporate governance.

The Board of Directors of Jupiter Energy Limited is responsible for the overall corporate governance of the consolidated entity, guiding and monitoring the business and affairs of Jupiter on behalf of the shareholders by whom they are elected and to whom they are accountable.

The Company's corporate governance principles and policies are structured with reference to the Corporate Governance Councils best practice recommendations, which are as follows:

Principle 1. Lay solid foundations for management and oversight

Principle 2. Structure the Board to add value

Principle 3. Promote ethical and responsible decision making

Principle 4. Safeguard integrity in financial reporting

Principle 5. Make timely and balanced disclosure

Principle 6. Respect the rights of shareholders

Principle 7. Recognise and manage risk

Principle 8. Remunerate fairly and responsibly

The Board's Corporate Governance Charter includes procedures for compliance with the ASX Listing Rules continuous disclosure requirements, trading in the Company's securities, the management of risk, and a Code of Conduct. Jupiter's corporate governance practices were in place throughout the year ended 30 June 2013.

BOARD OF DIRECTORS

Role of the Board

In general, the Board is responsible for, and has the authority to determine, all matters relating to the policies, practices, management and operations of the Company. It is required to do all things that may be necessary to be done in order to carry out the objectives of the Company.

Without intending to limit this general role of the Board, the principal functions and responsibilities of the Board include the following:

· To set the strategic direction for the Company and monitor progress of those strategies;

· Establish policies appropriate for the Company;

· Monitor the performance of the Company, the Board and management;

· Approve the business plan and work programmes and budgets;

· Authorise and monitor investment and strategic commitments;

· Review and ratify systems for health, safety and environmental management; risk and internal control; codes of conduct and regulatory compliance;

· Report to shareholders, including but not limited to, the Financial Statements of the Company; and

· Take responsibility for corporate governance.

CORPORATE GOVERNANCE STATEMENT (continued)

Composition of the Board

To add value to the Company the Board has been formed so that it has effective composition, size and commitment to adequately discharge its responsibilities and duties given its current size and scale of operations.

The names of Directors of the Company in office at the date of this statement are set out in the Directors' Report. Information regarding Directors' experience and responsibilities are included in the Directors' Report section of this Annual Report.

The number of Directors is specified in the Constitution of the Company as a minimum of three up to a maximum of ten.

The preferred skills and experiences for a Director of the Company include:

· Exploration for oil and gas accumulations;

· Development and production operations of hydrocarbon accumulations;

· Financing of operations

· Business Development; and

· Public Company financial reporting and administration.

Chairman of the Board

The Chairman of the Board should be a Non-Executive Director and the Chairman will be elected by the Directors. Mr Geoff Gander, however is an Executive Chairman and is not independent. Given his skills, experience and knowledge of the Company, the Board considers that it is appropriate for him to be Chairman.

Independent Directors

The Board considers that a Director is independent if that Director complies with the following criteria:

· Apart from Director's fees and shareholding, independent Directors should not have any business dealings which could materially affect their independent judgment;

· Must not have been in an Executive capacity in the Company in the last 3 years;

· Must not have been in an advisory capacity to the Company in the last 3 years;

· Must not be a significant customer or supplier for the Company;

· Must not be appointed through a special relationship with a Board member;

· Must not owe allegiance to a particular group of shareholders which gives rise to a potential conflict of interest;

· Must not hold conflicting cross Directorships; and

· Must not be a substantial shareholder or a nominee of a substantial shareholder (as defined under section 9 of the Corporations Act).

Using the ASX Best Practice Recommendations on the assessment of the independence of Directors. The Board considers that of a total of four Directors, only one is considered independent.

Mr Geoff Gander is an Executive Chairman of the Company and is not considered to be independent. However, his experience and knowledge of the Company makes his contribution to the Board such that it is appropriate for him to remain on the Board.

Mr Baltabek Kuandykov is an independent Non-Executive Director of the Company. His oil industry experience, especially within Kazakhstan, makes his contribution to the Board important and significant.

Mr Alastair Beardsall is a Non-Executive Director of the Company and is not considered to be independent as he was a nominee Director by The Waterford Group, a substantial shareholder. However, his experience and knowledge of the Company makes his contribution to the Board such that it is appropriate for him to remain on the Board.

CORPORATE GOVERNANCE STATEMENT (continued)

Mr Scott Mison is an executive director / CFO / Company Secretary of the Company and is not considered to be independent. However, his experience and knowledge of the Company makes his contribution to the Board such that it is appropriate for him to remain on the Board.

Retirement and Rotation of Directors

Retirement and rotation of Directors are governed by the Corporations Act 2001 and the Constitution of the Company. Each year one third Directors must retire and offer themselves for re-election. Any casual vacancy filled will be subject to shareholder vote at the next Annual General Meeting of the Company.

Independent Professional Advice

Each Director has the right to seek independent professional advice at the Company's expense after consultation with the Chairman. Once received the advice is to be made immediately available to all Board members.

Access to Employees

Directors have the right of access to any employee. Any employee shall report any breach of corporate governance principles or Company policies to a Director and/or Company Secretary/CFO who shall remedy the breach. If the breach is not rectified to the satisfaction of the employee, they shall have the right to report any breach to an independent Director without further reference to senior managers of the Company.

Insurance

The Directors review the requirements for insurance cover for the associated risks for its field operations, including drilling, production and storage of hydrocarbons and other activities and procures insurance cover at levels and costs they feel are appropriate.

Directors and officers insurance for Directors will be arranged by the Company at Company expense.

Share Ownership

Directors are encouraged to own Company shares.

Board Meetings

The following points identify the frequency of Board Meetings and the extent of reporting from management at the meetings:

· A minimum of four meetings are to be held per year;

· Other meetings will be held as required, meetings can be held by telephone link; and

· Information provided to the Board includes all material information on: operations, budgets, cash flows, funding requirements, shareholder movements, broker activity in the Company's securities, assets and liabilities, disposals, financial accounts, external audits, internal controls, risk assessment, new venture proposals, and health, safety and environmental (HSE) reports.

The number of Directors' meetings and the number of meetings attended by each of the Directors of the Company during the financial year are set out in the Directors' Report.

Board Performance Review

There was no evaluation conducted during the financial year.

CORPORATE GOVERNANCE STATEMENT (continued)

Other Areas for Board Review

· Reporting to shareholders and the market to ensure trade in the Company's securities takes place in an efficient, competitive and informed market; and

· Insurance, both corporate and joint venture related insurances.

Board Committees

Audit Committee

The Company does not have an audit committee. The Board is of the opinion that due to the nature and size of the Company, the functions performed by an audit committee can be adequately handled by the full Board.

The CEO and the CFO declare in writing to the Board that the Company's financial statements for the year ended 30 June 2013 present a true and fair view, in all material aspects, of the Company's financial condition and operational results and are in accordance with relevant accounting standards. This representation is made by the CEO and the CFO prior to the Director's approval of the release of the annual and six monthly accounts. This representation is made after enquiry of, and representation by, appropriate levels of management.

A non-executive Director meets with the Auditors without Executives present to go through the financial statements prior to sign off on the accounts.

Jupiter Energy Limited has requested the external auditors to attend the annual general meeting to be available to answer shareholders questions regarding the audit.

Nomination Committee

The Board of Directors of the Company does not have a nomination committee. The Board is of the opinion that due to the nature and size of the Company, the functions performed by a nomination committee can be adequately handled by the full Board.

Remuneration Committee

The Company does not have a remuneration committee. The Board is of the opinion that due to the nature and size of the Company, the functions performed by a remuneration committee can be adequately handled by the full Board.

Remuneration levels for Directors, Secretaries, Senior Executives of the Company, and relevant group Executives of the consolidated entity ("the Directors and Senior Executives") are competitively set to attract and retain appropriately qualified and experienced Directors and Senior Executives.

The remuneration structures explained below are designed to attract suitably qualified candidates, reward the achievement of strategic objectives, and achieve the broader outcome of creation of value for shareholders. The remuneration structures take into account:

· the capability and experience of the Directors and Senior Executives

· the Directors and Senior Executives ability to control the relevant segment/s' performance

· the consolidated entity's performance including:

o the consolidated entity's earnings

o the growth in share price and returns on shareholder wealth

· the amount of incentives within each Directors and Senior Executives remuneration

For details of remuneration paid to Directors and officers for the financial year please refer to the Directors' Report on page 17.

CORPORATE GOVERNANCE STATEMENT (continued)

Risk Management

The risks involved in oil and gas exploration Company and the specific uncertainties for the Company continue to be regularly monitored and the full Board of the Company meets on an annual basis to formally review such risks. All proposals reviewed by the Board include a consideration of the issues and risks of the proposal.

The potential exposures, including financial, reputation, and HSE, with running the Company have been managed by the Board and senior management in Kazakhstan who together have significant broad-ranging industry experience.

Additionally, it is the responsibility of the Board to assess the adequacy of the Company's internal control systems and that its financial affairs comply with applicable laws and regulations and professional practices. The CEO and the CFO declare in writing to the Board that the financial reporting risk management and associated compliance controls have been assessed and found to be operating efficiently and effectively. This representation is made by the CEO and CFO prior to the Director's approval of the release of the annual and six monthly accounts. This representation is made after enquiry of, and representation by, appropriate levels of management.

PROMOTION OF ETHICAL AND RESPONSIBLE DECISION-MAKING

Code of Conduct

The goal of establishing the Company as a significant Australian-based petroleum exploration and production Company is underpinned by its core values of honesty, integrity, common sense and respect for people. The Company desires to remain a good corporate citizen and appropriately balance, protect and preserve all stakeholders' interests.

The Board has adopted a Code of Conduct for Directors and employees of the Company. The Company's goal of achieving above average wealth creation for our shareholders should be enhanced by complying with this Code of Conduct which provides principles to which Directors and employees should be familiar and to which they are expected to adhere and advocate.

It is the responsibility of the Board to ensure the Company performs under this Code and for its regular review.

Diversity

The Board has not adopted a separate diversity policy, however is committed to workplace diversity and recognizes the benefits arising from recruitment, development and retention of talented, diverse and motivated workforce. The Company is not of a sufficient size to justify measurable objectives at this stage. As at 30 June 2013, there were sixteen women in the Groups workforce, two of which held key executive positions.

Trading in Company Securities by Directors, officers and employees

Trading of shares is covered by, amongst other things, the Corporations Act, the ASX Listing Rules, the AIM Listing Rules and the KASE Listing Rules. The Board has established a Securities Trading Policy that establishes strict guidelines as to when a Director, officer or an employee can deal in Company shares. The policy prohibits trading in the Company's securities whilst the Directors, officer or employee is in the possession of price sensitive information.

For details of shares held by Directors and Officers please refer to the Directors' Report on page 3.

CORPORATE GOVERNANCE STATEMENT (continued)

SHAREHOLDER COMMUNICATION

The Board aims to ensure that shareholders and the general investing community have equal access to the Company's information.

The Company has policies and procedures that are designed to ensure compliance with ASX, AIM and KASE Listing Rules disclosure requirements and to ensure accountability at a senior management level for that compliance. This disclosure policy includes processes for the identification of matters that may have material effect on the price of the Company's securities, notifying them to the ASX and posting them on the Company's website.

The Company also has a strategy to promote effective communication with shareholders and encourage effective participation at general meetings through a policy of open disclosure to shareholders, regulatory authorities and the broader community of all material information with respect to the Company's affairs including, but not limited to:

· Company's activities

· Conflicts of interest and related party transactions;

· Executive remuneration;

· The grant of options and details of Share Option and Performance Rights Plans;

· The process for performance evaluation of the Board, its committees, individual Directors and key managers;

· The link between remuneration paid to Directors and Executives and corporate performance; and

· The use of clear and concise text in all communications.

The following information is communicated to shareholders and available on the Company web site (www.jupiterenergy.com):

· The Annual Report and notices of meetings of shareholders;

· Quarterly reports reviewing the operations, activities and financial position of the Company;

· All documents that are released to the ASX, AIM and KASE are made available on the Company's website; and

· All other information on the Company's website is updated on an ongoing basis.

AUDITORS INDEPENDENCE DECLARATION

Financial StatementsFOR THE YEAR ENDED 30 JUNE 2013

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2013

The consolidated statement of comprehensive income is to be read in conjunction with the notes of the financial statements

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2013

The consolidated statement of financial position is to be read in conjunction with the notes of the financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2013

The statement of cash flows is to be read in conjunction with the notes of the financial statements.

STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 30 JUNE 2013

The statements of changes in equity are to be read in conjunction with the notes of the financial statements.

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2013

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Group for the annual reporting period ending 30 June 2013. These are outlined in the following table.

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS